Obamacare's coverage gap: The poor caught in between

Dr. Sanjay Gupta talks about Obamacare with a couple in Greenville, South Carolina.

Story highlights

Some earn too much money to qualify for Medicaid, but not enough to obtain ACA subsidies

26 states decided not to expand Medicaid after the Supreme Court's decision

Those who can't get Medicaid or subsidies won't pay a fine for not having health insurance

I met a woman named Yvonne in Greenville, South Carolina, where the CNN Express was reporting on the rollout of Obamacare. Yvonne had a big smile and was very excited -- you couldn't miss her.

I first noticed her standing in line, waiting patiently to ask a few questions about health care. Most of the questions I had been asked up until that time revolved around the logistics of signing up, whether they could pick a particular doctor and how much all this was going to cost.

Yvonne, who didn't give her last name, started by telling me that she had been able to get off Medicaid in the past year. Before that, she had been living in her car, intermittently staying with friends. Now she has a place to live, and she's excited about the prospect of finally being able to get private health care insurance for the first time in her life.

Yvonne, 35, told me she works part-time as a hairstylist assistant. She said she makes $9 an hour, which at 20 hours a week works out to about $9,360 a year. She is still impoverished, but considers herself lucky because she's never had a major illness.

As we spoke about South Carolina's sign-up process, I realized I was explaining some unwelcome news: Yvonne is not eligible for any assistance toward buying health insurance.

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Let me try to explain: In a state that has chosen not to expand Medicaid, Yvonne is in the staggering position of now making too much money to qualify for Medicaid, and too little to obtain subsidies through the Affordable Care Act.

This wasn't how it was supposed to go down for Yvonne and others like her all over the country. When you imagine the people likely to benefit the most from the Affordable Care Act, you probably think of someone just like her.

By obtaining a real job with enough income, Yvonne has disqualified herself from her state's Medicaid program. But in order to qualify for subsidies in South Carolina, she needs to get above the poverty line, and she is not quite there. Yvonne and an estimated 7 million others now find themselves in a coverage gap.

The tax subsidies available through the health exchanges were intended to make private insurance coverage affordable for those between the poverty line and four times as much -- people who now shoulder the responsibility, by law, of purchasing their own coverage.

Last year, in its landmark ruling that left most of the ACA in place, the U.S. Supreme Court ruled that the Medicaid expansion is optional for states. South Carolina, and 25 other states, turned it down. As a result, a big swath of the uninsured will stay that way when new coverage options kick in January 1.

I asked Kentucky Senate hopeful Matt Bevin, a Republican, who was against the expansion in his state, about this. Democratic Gov. Steve Beshear has been a proponent of the law, and Kentucky has expanded Medicaid to cover anyone making up to 138% of the poverty line. When I described Yvonne's situation to Bevin, he was sympathetic but immediately replied, "Where is the money going to come from?"

His is a common sentiment among leaders of states that have refused Medicaid dollars from the federal government. For the time being, the money comes from the federal government. In the states that accepted Medicaid expansion, the federal government will pick up 100% of the tab for four years. For the next three years, it will pay for slightly less. Beyond 2020 it will cover 90% of the cost.

The man who oversees the health insurance expansion in Maryland, Dr Joshua Sharfstein, was stunned that so many states turned the money down. According to the analysis in Maryland, the economic benefits of Medicaid expansion would be in the billions.

As I walked with him, I asked if he could give a single reason -- medically or financially -- for a state not to accept the Medicaid dollars. He thought about it for a moment, and said "none."

"This is just politics," he added.

Yvonne doesn't have many options. She can't get subsidies, Medicaid or health insurance. One small solace is that she won't be forced to pay any tax penalty for not having insurance.

"Oh well, I guess that is good," Yvonne replied when I told her.

She had worked so hard to come off Medicaid, but asked me at the end of the day for a list of states where she might move to get back on the Medicaid program once again.